Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 7,200 units of product were as follows:
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Standard Costs
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Actual Costs
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Direct materials
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9,400 lbs. at $4.80
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9,300 lbs. at $4.70
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Direct labor
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1,800 hrs. at $18.70
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1,840 hrs. at $19.20
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Factory overhead
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Rates per direct labor hr.,
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based on 100% of normal
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capacity of 1,880 direct
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labor hrs.:
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Variable cost, $3.80
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$6,770 variable cost
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Fixed cost, $6.00
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$11,280 fixed cost
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Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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Price variance
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$
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Select Favorable Unfavorable Item 2
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Quantity variance
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$
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Select Favorable Unfavorable Item 4
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Total direct materials cost variance
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$
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Select Favorable Unfavorable Item 6
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b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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Rate variance
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$
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Select Favorable Unfavorable Item 8
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Time variance
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$
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Select Favorable Unfavorable Item 10
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Total direct labor cost variance
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$
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Select Favorable Unfavorable Item 12
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c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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Variable factory overhead controllable variance
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$
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Select Favorable Unfavorable Item 14
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Fixed factory overhead volume variance
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$
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Select Favorable Unfavorable Item 16
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Total factory overhead cost variance
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$
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Select Favorable Unfavorable Item 18
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